Ocado Group Plc £OCDO - A Valuation On 29th September 2021

This online grocer and logistics business is reinvesting for international growth. It's a big market, but competition is fierce and there is a decent chance that the business doesn't survive.

Summary

Ocado, the online grocer and logistics business, is reinvesting for growth. This global market is growing rapidly (29% CAGR), but the competition across this industry is fierce and characterised by small margins. Ocado will continue expanding overseas, and costs will normalise. Still, the enormity of competition from other grocers and online retailers (looking at you, Amazon) will prevent anyone in this space from taking outsized profits. The logistics business is capital intensive, and there is a decent chance that Ocado doesn't make it.

Market Price = £17.43
Estimated Value = £7.97
Monte-Carlo Price Percentile = 90%
Rating At Current Price = SELL

If I had Ocado in my portfolio, I would sell the position as my valuation suggests it is highly overvalued.